The education system of Indonesia, including higher education has a lot of ground to cover and here’s an opportunity that startups can’t afford to miss. They’ve taken upon themselves to fill the need gap.

e27 spoke to some of the players in the industry to review the ed-tech business in the archipelago

Many problems = good prospect
According to Novistiar Rustandi, CEO and Founder of Harukaedu, a learning management system targeting higher education, the prospect for ed-tech startups is very good in Indonesia. He cites three problems in Indonesia’s higher education today:

Shortage of seats: According to data from Ministry of Education in 2010, of the 2.5 million student applicants, only one million are accepted because of the shortage.

Shortage of qualified educators: According to data from McKinsey, cities outside Java island are growing fast, while qualified educators mostly live in cities in Java island. Even though the government is building up universities outside Java island, universities are having a tough time due to the shortage of qualified educators.

Shortage of skilled workers: According to data from World Bank, 85 per cent companies in ‘manufacturing’ have reported difficulties in finding workers for managerial positions; and 69 per cent reported difficulties in finding workers with specific skills.

According to Rustandi, if the above-mentioned problems are not solved, Indonesia could face a shortage of 9 million skilled workers by 2030. As internet penetration gets better and infrastructure improves, he sees “online education or digital education as one of the potential solution. Here is where ed-tech startups can seize the opportunity.”

He feels that even the investors are quite kicked-up about the educational startups, because of the potential of growth in this market. “Indonesia’s higher education market is predicted to grow five times from US$3 billion to US$15 billion by 2030,” Rustandi, who is also one of the directors of Jakarta Founders Institute, tells e27, adding a word of caution, “But of course to get an investment, the startups have to show a good traction, as well as a strong business model.”

Like Rustandi, Winastwan Gora, Founder of Kelase is optimistic about the ed-tech scene in Indonesia. Cheaper internet rates are a value-add. Painting a picture of the growth and opportunity in the market, he says, “Let me paint you a picture. In K12 education alone, there are 300,000 schools, 3.9 millions teachers, and 54 millions students. Add to this the number of the parents. Can you see how big the market is?”

B2B vs B2CGlobal Ed Tech Startups Awards categorises ed-tech startups into five categories: Curriculum Product, Classroom Needs, School Operations, College Resources, and Everything Else (Other). Popular online learning facility or online cources such as Coursera or Khan Academy fall into College Resources. Companies, which provide Learning Management System (LMS) are categorised under School Operations.

“For the sake of simplicity, we can just split ed-tech startups into two types: B2C, which deal directly with end user/consumer, such as Coursera, edx, udacity, udemy, skillshare, etc; and B2B, which deal mostly with educational institutes or training providers ,” says Rama Manusama, CEO of Wikasa.

Manusama though casts doubts on the prospects of B2C. “It’s still difficult for startups to make a scalable business. But the prospects are good for B2B,” he says.

According to the Master of Science from Erasmus University, B2C business model will face a challenge from poor infrastructure and the lack of usability of online payment – which is hindering e-commerce too – as such supporting facilities are still underdeveloped.

“The B2B model will be more straightforward. There are lots of educational institutes, that don’t have Learning Management System (LMS) for example. This is the real need that can be filled by startups,” says Manusama, who received funding from Systec Group recently.

His comment is backed by Herry Fahrur Rizal, CEO of Eduqo, an online media, focused at edtech startups. According to Rizal, most of Indonesian ed-tech startups fall under LMS and MOOC (Massive Open Online Courses) categories. “Many people still associate ed-tech with online courses. But actually, ed-tech business has a vast range of varieties. If you are passionate about education business, there are many options for you to choose,” he says.

Although doubting the supporting infrastructure for B2C business, Manusama advises players to look at the bigger picture, and bigger market potential outside Indonesia.

Giving it back to the community
Many founders we spoke to, admit that passion is the reason why they have jumped into the educational startup scenario.

“I teach entrepreneurship in Binus University and Technopreneurship in Surya University, and I realised that I have a passion for education. Besides, education industry has a good purpose, while at the same time is also a profitable business,” says Rustandi.

Gora from Kelase would “like” to contribute “to the development of Indonesia’s education.”

Manusama feels that the “internet revolution” has not just brought changes in technology, but has ushered in “social changes” too. “Online education will play an important role in this era. For the first time in history, everybody can access knowledge instantly. I just want to be a key part of this revolution, and do great things,” he says. He claims that he himself has benefited a lot from the online courses.

Top buyer of mobile learning
Quoting a report from Ambient Insight, Rizal from Eduqo says that three years from now, Indonesia will be amongst the top three buyers of mobile learning, after China and India. “Despite all the challenges faced by startup players, I believe that ed-tech business will fly, if there is a nice cooperation among ABG: Academic, Business, and Government,” concludes Rizal.

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